Judge: Serena R. Murillo, Case: 23STCP02141, Date: 2023-09-28 Tentative Ruling

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Case Number: 23STCP02141    Hearing Date: October 6, 2023    Dept: 31

TENTATIVE

Petitioner’s motion to strike Respondent’s response to petition to correct arbitration award is DENIED. Petitioner’s Petition to Correct Arbitration Award is DENIED without prejudice to Petitioner bringing a Motion to Confirm Arbitration Award. 

Legal Standard

Code of Civil Procedure section 1285 provides, “Any party to an arbitration in which an award has been made may petition the court to confirm, correct or vacate the award. The petition shall name as respondent all parties to the arbitration and may name as respondents any other persons bound by the arbitration award.” 

Code of Civil Procedure section 1285.4 states, “A petition under this chapter shall: (a) Set forth the substance of or have attached a copy of the agreement to arbitrate unless the petitioner denies the existence of such an agreement; (b) Set forth the names of the arbitrator; and (c) Set forth or have attached a copy of the award and the written opinion of the arbitrators, if any.” 

Code of Civil Procedure section 1285.2 provides that “[a] response to a petition under this chapter may request the court to dismiss the petition or to confirm, correct or vacate the award.” 

The grounds upon which a court may correct an arbitration award are limited by Code of Civil Procedure section 1286.6. “[W]here parties have agreed their dispute will be resolved by binding arbitration, judicial intervention is limited to reviewing the award to see if statutory grounds for vacating or correcting the award exist.” (Corona v. Amherst (2003) 107 Cal.App.4th 701, 706.) 

Discussion

Petitioner All Rights Entertainment moves to strike Respondent Tetrad Studios’ response to its petition to correct the arbitration award. Petitioner also petitions to correct the arbitration award.

I.                    Motion to Strike Response to Petition to Correct Arbitration Award

Petitioner moves to strike Respondent’s response to the petition to correct the arbitration award, arguing that Respondent did not file the response within 10 days of service of the petition as required under Code of Civil Procedure section 1290.6.

“A response shall be served and filed within 10 days after service of the petition except that if the petition is served in the manner provided in paragraph (2) of subdivision (b) of Section 1290.4, the response shall be served and filed within 30 days after service of the petition. The time provided in this section for serving and filing a response may be extended by an agreement in writing between the parties to the court proceeding or, for good cause, by order of the court.” (C.C.P. §1290.6.) Unless the response is duly served and filed, under section 1290 the allegations of the petition are deemed to be admitted by respondent.” (DeMello v. Souza (1973) 36 Cal.App.3d 79, 83 (Citations Omitted).)

Petitioner argues that it served Respondent with the petition on July 7, 2023 and thus became complete on July 17, 2023. (Code of Civil Procedure § 415.20.) Thus, in order to be timely, a response must have been filed by July 27, 2023. Respondent did not file its response until August 25, 2023.

Respondent argues there is good cause for filing its response late or that it did not file late at all, because Petitioner did not properly serve the petition in the manner of the agreement. “A copy of the petition and a written notice of the time and place of the hearing thereof and any other papers upon which the petition is based shall be served in the manner provided in the arbitration agreement for the service of such petition and notice.” (Code Civ. Proc. § 1290.4(a)). “If the arbitration agreement does not provide the manner in which such service shall be made and the person upon whom service is to be made has not previously appeared in the proceeding and has not previously been served in accordance with this subdivision:  Service within this State shall be made in the manner provided by law for the service of summons in an action.” (Code Civ. Proc. § 1290.4(b)(1).)

Respondent argues that in accordance with Section 14 of the Agreement, Petitioner was required to serve Respondent at 21241 Ventura Blvd, Ste 166, Woodland Hills, CA 91364. (Lopez Decl., Ex. B). Instead, Petitioner delivered copies of the Petition to Cher Hogan at 5850 Canoga Avenue, Suite 300, Woodland Hills, CA 91367. (Id., Ex. D). Petitioner has not shown by affidavit or otherwise that Petitioner was unable to serve Respondent’s designated agent at 21241 Ventura Blvd, Ste 166, Woodland Hills, CA 91364. (Lopez Decl., ¶ 10).

The Court finds that Petitioner was required to serve in the matter of a summons. First, section 14 of the agreement applies only to the manner in which notices may be sent, but says nothing about service of process. (Lopez Decl., Exh. B; See Abers v. Rohrs (2013) 217 Cal.App.4th 1199, 1203.)

Nevertheless, as Respondent points out, the proof of service shows service was made by substituted service, but it does not include a declaration of reasonable diligence. (7/10/23 Proof of Service.) Code of Civil Procedure section 415.20, subdivision (b) provides: “a summons may be served by leaving a copy of the summons and complaint at the person’s dwelling house, or usual mailing address. . . in the presence of a competent member of the household . . . at least 18 years of age, who shall be informed of the contents thereof, and by thereafter mailing a copy of the summons and of the complaint by first-class mail, postage prepaid to the person to be served at the place where a copy of the summons and complaint were left.” A plaintiff must first exercise reasonable diligence to effect personal service of a summons before serving the summons by substituted service.  (Evartt v. Superior Court (1979) 89 Cal.App.3d 795, 799; but see Code Civ. Proc. § 415.20, subd. (c) [reasonable diligence not allowed for service on private mailbox when it is the only address reasonably known].)  “Two or three attempts to personally serve a defendant at a proper place ordinarily qualifies as [] reasonable diligence.”  (Rodriguez v. Cho (2015) 236 Cal.App.4th 742, 750 [citations and quotations omitted].) Further, Petitioner’s counsel has also not filed a declaration of reasonable diligence.

The Court finds that Respondent was not properly served with the Petition. While Petitioner argues that Respondent received actual notice of the petition, this is not sufficient. “Merely providing a party with notice that a petition has been filed does not establish personal jurisdiction.” (Abers, supra, Cal.App.4th at 1203.) Proper service of process of a petition or complaint is the means by which a court obtains personal jurisdiction over a party. (In re Jennifer O. (2010) 184 Cal.App.4th 539, 547 [“a court acquires jurisdiction over a party by proper service of process or by that party's general appearance”].) As such, the Court finds that as Respondent was never duly served with the petition, the 10-day trigger could not have started by the improper service of the petition. In addition, the Court finds that even if service did trigger the 10-day deadline, Respondent had good cause to file late. Respondent contends that its agent provided notice of service on August 25, 2023, which is the day Respondent filed its response.

As such, the Court denies the motion to strike.

II.                  Petition to Correct Arbitration Award

Petitioner also petitions to correct the arbitration award. However, the petition cannot be granted for four reasons.

First, Petitioner failed to set forth or have attached the arbitration award as required under Code of Civil Procedure section 1285.4.

Second, as discussed above, the petition was not served properly.

Code of Civil Procedure Section 1286.8 limits the court's power to correct an award, stating that a “court may not correct an award unless: [¶] (a) A petition or response requesting the award be corrected has been duly served and filed. (Code of Civil Procedure Section 1286.8; see also Abers, supra, 217 Cal.App.4th at 1205.)

As the petition was not properly served, the Court cannot grant it.

Third, the petition was not timely served.

Code of Civil Procedure section 1288 provides: 

A petition to confirm an award shall be served and filed not later than four years after the date of service of a signed copy of the award on the petitioner. A petition to vacate an award or to correct an award shall be served and filed not later than 100 days after the date of the service of a signed copy of the award on the petitioner. 

According to the petition, the arbitration award was granted on March 9, 2023, and it was also served on Petitioner on March 9, 2023. This petition was filed on June 20, 2023. However, Respondent was served on June 27, 2023. Code of Civil Procedure section 1288 requires a petition to correct an award to be served and filed not later than 100 days after the date of service of the award on Petitioner. As such, the petition was served later than 100 days and it is untimely.

Petitioner argues that the caselaw only refers to filing the petition outside the 100-day window, and do not involve serving the petition outside the window. Not so. In Santa Monica College Faculty Assn. supra, 243 Cal.App.4th at 545, “The district filed its petition to vacate that award 99 days after being served with the signed award, but the district did not serve its petition until 108 days after the award was served.” (Santa Monica College Faculty Assn., supra, 243 Cal.App.4th 538, 545.)

Petitioner also argues that the “ostensible” failure to timely serve the petition does not deprive this Court of jurisdiction to “hear” the petition, Law Finance Group, LLC v. Key, 14 Cal. 5th 932 (2023), especially where, as here, the delay was caused by Respondent’s failure to post a current address for its Agent of Service of Process with the California Secretary of State.

While the California Supreme Court in Law Finance Group, LLC v. Key (2023) 14 Cal.5th 932, 959-960, held that the 100-day deadline was non-jurisdictional and thus subject to equitable tolling and equitable estoppel, Petitioner has not requested that tolling be applied to the 100-day deadline, other than stating in passing that the delay was caused by Respondent’s failure to post a current address. Thus, the Court has not considered this argument.

Fourth, if the petition was properly served and timely served, the Court also notes the order sought by Petitioner would not be available under Code of Civil Procedure section 1286.6. Until an arbitration award is confirmed by court judgment, it has only the effect of a contract between the parties. (Code Civ. Proc., § 1287.6.) An arbitration award may only be corrected on specific statutory grounds. (Code Civ. Proc., § 1286.6.) Section 1286.6 provides: 

Subject to Section 1286.8, the court, unless it vacates the award pursuant to Section 1286.2, shall correct the award and confirm it as corrected if the court determines that: 

(a)¿There was an evident miscalculation of figures or an evident mistake in the description of any person, thing or property referred to in the award; 

(b)¿The arbitrators exceeded their powers but the award may be corrected without affecting the merits of the decision upon the controversy submitted; or 

(c)¿The award is imperfect in a matter of form, not affecting the merits of the controversy. 

Except on these grounds, and those provided to vacate the award under Code of Civil Procedure section 1286.4, arbitration awards are immune from judicial review in proceedings to challenge or enforce the award. (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 12–13.) Thus, courts will not review the sufficiency of the evidence to support the award. Nor will courts pass upon the validity of the arbitrator’s reasoning. The court simply may not substitute its judgment for that of the arbitrator. (Morris v. Zuckerman (1968) 69 Cal.2d 686, 691.) Further, errors of fact or law committed by the arbitrator, no matter how egregious, are not grounds for challenging the arbitrator’s award under California law. (Moncharsh, supra, 3 Cal.4th at 11.) 

Petitioner moves to correct the Arbitration Award on the grounds that the amount of the award was not calculated correctly, or a person, thing, or property was not described correctly; the arbitrator exceeded her authority; or the award is imperfect as a matter of form. Petitioner argues that although the Arbitrator found that "there was no Force Majeure Event that justified termination of the...Agreement", and that "Respondent's termination of the Sales Agreement constitutes a breach of the...Agreement", the Arbitrator failed to find that If the Sales Agency Agreement was not validly terminated, it remains in full force and effect; Claimant should be permitted to continue to perform thereunder. Moreover, when Respondent entered into a new agreement with 13 Films to “sell” the motion picture “Jade” in the international territories of the world, it did so in breach of the Agreement with Petitioner, which granted the exclusive right to do so to Petitioner. Respondent must now be required to rescind its agreement with 13 Films.

Petitioner argues that because the Arbitrator has found that Respondent’s termination of the Agreement with Claimant to “sell” the motion picture “Jade” in the international territories was not legally valid, Petitioner should be compensated, and put in the position it was in before the wrongful bad faith termination of the Agreement, as follows:

- The Agreement should be declared to be in full force and effect;
- Respondent’s agreement with 13 Films for the Motion Picture should be rescinded, and all of the agreements with the various distributors which 13 Films has heretofore entered into should be assigned to Petitioner (with Petitioner being entitled to its commissions at the rate specified in Paragraph 7 of the Agreement);
- Petitioner should receive compensation for the damage to its reputation caused by Respondent’s wrongful termination of the Agreement;
- An apology by Respondent should be made, with the wording approved by Petitioner, and published in all of the entertainment industry publications;
--Petitioner should be reimbursed for all of the legal fees it has incurred in connection with this matter, from February 1, 2022 (the date of the Termination Letter) until its final conclusion.  

Petitioner has failed to establish that there was an evident miscalculation of figures, or a person, thing, or property was not described correctly; the arbitrator exceeded her authority but the award may be corrected without affecting the merits of the decision upon the controversy submitted; or the award is imperfect as a matter of form not affecting the merits. Petitioner fails to explain how this is a miscalculation or something that does not affect the merits of the controversy. Petitioner’s request appears to be at the heart of the controversy and in effect, Petitioner is arguing the arbitrator erred. Petitioner has failed to cite to any authority, and the Court is aware of none, that allows the Court to “correct” an Arbitration Award in the manner requested. 

Thus, the Court finds that the petition was improperly and untimely served under Code of Civil Procedure sections 1286.8, and 1288. Moreover, it fails to comply with Code of Civil Procedure section 1285.4, and does not seek relief available under Code of Civil Procedure Section 1286.6.

Conclusion

Based on the foregoing, Petitioner’s motion to strike Respondent’s response to petition to correct arbitration award is DENIED. Petitioner’s Petition to Correct Arbitration Award is DENIED without prejudice to Petitioner bringing a Motion to Confirm Arbitration Award. 

Moving party is ordered to give notice.